PACP Committee Report

The Coast Guard operates a fleet of over 100 vessels, ranging from large icebreakers, to science vessels, to mid-shore patrol vessels, to small in-shore program vessels. In order to manage the fleet reliably and cost-effectively, it is important that the Coast Guard has appropriate material management systems and standard maintenance procedures in place.

A 2000 audit by the OAG of fleet management found numerous problems in key management activities, such as a one-year funding horizon, a lack of service accords, information systems that are not integrated, and the fleet does not employ a life cycle approach to managing its vessels.^[15] In response to the findings of this audit, the Coast Guard developed a Fleet Management Renewal Initiative, which included an action plan. The 2007 follow-up audit found that many items in the action plan had not yet been fully implemented.^[16] Even though the audit found many items remain outstanding, the Coast Guard considers the initiative complete.

Moreover, the follow-up audit found a number of weaknesses in fleet management. For example, its Integrated Technical Services project is behind schedule, the Maintenance Information Management System is not yet fully implemented, and the Coast Guard does not have standardized maintenance procedures.^[17] During the hearing, the Commissioner told the Committee that the Integrated Technical Services project had been completed, although a year behind schedule. Of greater concern was the fact that the Commissioner had frozen any more capital expenditures on the Maintenance Information Management System because an external review had raised significant concerns.

The audit presents several case studies of costly maintenance failures that vividly demonstrate what can go wrong if the appropriate standardized practices are not in place.^[18] The concern over the lack of adequate systems and procedures is also expressed within the Coast Guard. As quoted in the audit, the Director General of Integrated Technical Services reported to the Commissioner that “many of the catastrophic failures that have occurred over the past several years were avoidable. … [T]he various failures have not been caused by age alone, but by the lack of even the most fundamental material management system.”^[19]

The Commissioner of the Coast Guard told the Committee that he may not have sufficient staff to perform maintenance functions, as the ageing fleet requires more work to maintain ships past their normal lifespan. The Commissioner said the Coast Guard was undergoing a maintenance review and would be seeking additional funding from the Treasury Board based on the results of that review, “I don’t have the resources in place at the moment. But this is one of the key things I will be discussing with Treasury Board if the final result of our maintenance review confirms, which I think it will, that this is a priority issue we have to address if we’re going to make fundamental improvement.”^[20]

The Committee believes it is vital that the Coast Guard resolve these issues before acquiring new vessels worth over $1 billion. If these problems are not fixed, the Coast Guard will simply import them to the new vessels and risk seriously undermining their effectiveness. Given the serious and systemic nature of the maintenance problems at the Coast Guard, the Committee would like to have further assurance that they are being resolved. Consequently, the Committee recommends that:

Recommendation 3

The Canadian Coast Guard provide the Public Accounts Committee with the results of its maintenance review when complete.

The Coast Guard has undergone significant organizational changes over the past number of years. In 1995, responsibility for the Coast Guard was moved from Transport Canada to Fisheries and Oceans Canada. The rationale was to achieve cost savings by amalgamating the two vessel fleets under a single department. Under this arrangement, the Commissioner of the Coast Guard set national policy and direction, and Fisheries and Oceans Canada’s regional directors general, who reported to the department’s deputy minister, were responsible for the management of Coast Guard operations.

In order to better integrate the Coast Guard as a national institution, Fisheries and Oceans Canada’s Deputy Minister delegated direct responsibility for all of the Coast Guard’s operations to the Commissioner of the Coast Guard in 2003. Later in 2003, the Coast Guard’s responsibility for regulatory policy for marine safety, boating safety, and navigable water protection was transferred to Transport Canada, which allowed the Coast Guard to focus on service delivery.

In 2005, the Coast Guard became a Special Operating Agency within Fisheries and Oceans Canada. The Commissioner of the Coast Guard now reports to the Deputy Minister of Fisheries and Oceans Canada, and the Coast Guard relies on the department for administrative services such as finance, human resources, and real property management.

According to the audit, when the Coast Guard became a Special Operating Agency (SOA), it developed a plan of how the SOA would be implemented. The Coast Guard needed to clarify governance arrangements, accountability relationships, spending authorities, and performance measurement and reporting. Yet, as of 30 June 2006, fewer than 40% of the tasks had been completed within the plan’s deadlines. The plan proved to be overly optimistic given that no new funding was provided for implementing the SOA.^[21]

Despite its status as a SOA, the Coast Guard is not a stand-alone organization, and it operates within Fisheries and Oceans Canada. While the Coast Guard has some operational independence as a SOA, it must integrate its services with Fisheries and Oceans Canada. It also means that the Coast Guard does not have its own Estimates votes and is not required to produce a separate departmental performance report. More importantly, there has been some indication that it has been very difficult to merge the different operating procedures and organizational cultures of the Coast Guard with Fisheries and Oceans Canada.

The Coast Guard may benefit from moving beyond its current status as a SOA to becoming a stand-alone organization. This would give it more operational independence and help it establish itself as a national institution. The Committee believes this is an issue that requires further study. As the Privy Council Office has responsibility for machinery of government issues, the Committee recommends that:

Recommendation 4

The Privy Council Office study whether the Canadian Coast Guard should become a stand-alone organization and provide the results of this study to the Public Accounts Committee by 31 December 2008.

The Canadian Coast Guard provides vital marine services to Canadians. The Committee appreciates the hard work and dedication of the Coast Guard’s many employees. However, the findings of the follow-up audit demonstrate that the Coast Guard has not had adequate management leadership for a number of years. Administrative weaknesses have persisted over many years and initiatives to fix them are never completed. The current senior management of the Coast Guard has accepted responsibility and accountability for making improvements, and the Committee sincerely hopes that the good intentions are this time carried out. Given the past lack of progress and the seriousness of the issues to the long-term viability of the Coast Guard as a national institution, senior management must improve its performance. The Public Accounts Committee intends to monitor the situation to ensure that progress is made and initiatives are completed.